(ADVISORY- Follow European and UK stock markets in real time on
the Reuters Live Markets blog on Eikon - see cpurl://apps.cp./cms/?pageId=livemarkets)
* Major European indexes hit fresh highs
* Strong PMI numbers support equities
* Italian stocks outperform, banks rally
By Atul Prakash
LONDON, Jan 2 Major European equity indexes
climbed to new highs in thin trading on Monday, with strong
manufacturing reports from the region boosting sentiment on the
first trading day of 2017.
Italy's FTSE MIB index was up 1.3 percent by 1037
GMT after rising to its highest since January 2016. Germany's
DAX rose 0.8 percent after reaching to its highest in
nearly 17 months, while France's CAC gained 0.3 percent
following a 13-month peak earlier in the day.
The euro zone's blue-chip Euro STOXX 50 index
was up 0.4 percent, the highest level since December 2015, with
a brighter macroeconomic picture helping the broader market.
British and Swiss markets were closed.
IHS Markit's 2016 manufacturing Purchasing Managers' Index
for the euro zone registered 54.9 in December, its highest since
April 2011. That was well above both the 50 mark which separates
growth from contraction, and above November's 53.7.
German manufacturing growth reached its highest in almost
three years, driven by rising demand from Asia and the United
States. French manufacturing hit a 5-1/2 year high, and Italian
manufacturing activity grew at its fastest rate since June.
"It's nice to see some good economic numbers on the first
trading day of the near year. It has improved sentiment and
could help the market to set new highs in the coming months,"
said Koen De Leus, chief economist at BNP Paribas Fortis.
"However, the road ahead looks bumpy because of several
political risks in Europe. Overall, I am positive on European
stocks this year as valuations are quite attractive compared to
the United States and company margins are slowly improving,
helped as well by the cheap euro."
Italian shares were also boosted by a rally in the country's
lenders. The Italian banking index rose about 2
percent, supported by a 5.6 percent jump in Banco BPM
on the first day of trading for the newly merged bank.
Banco BPM said on Monday that the new lender, created after
a merger between Banco Popolare and BPM,
started with a share capital of 7.1 billion euros.
Other Italian banks were also up, with shares in UniCredit
, UBI Banca and Mediobanca up
between 2.1 percent and 3.5 percent.
Trading was thin, with volumes at 8 percent for the CAC
index and 13 percent for the euro STOXX 50 of their 90-day daily
averages in the first two hours of trading.
Britain's blue-chip FTSE 100 index closed 2016 at a
record high on Friday after clocking a yearly gain of 14.4
percent, the best performer among major European stock indexes,
with a sharp decline in sterling after the vote to leave the EU
helping exporters and stronger metals prices boosting miners.
Among individual movers, Dialog Semiconductor, a
maker of chips used in smartphones, fell 0.3 percent,
underperforming the broader market, after a report said late on
Friday that Apple would trim output of iPhones by about
10 percent in the Jan-March quarter.
(Editing by Peter Graff)